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>> and let's start with google. investors wiping more than 9% off the company's market cap yesterday. quarterly results falling well short of expectations. numbers coming hours ahead of schedule. google blaming the misfire on an unauthorized filing by its financial printer rr donely, the fat finger. can we really blame it on on rr donnelly? check out the second paragraph. it merely read, quote, pending larry quote. clearly ahead of what with an expectation to send it after the market closed. >> they septembnt an incompleter do donnelly to begin with? >> the question is who really should take the blame. p. >> we saw it with your newspaper the other day.
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>> oh, yeah, ryight, insert quoe here. >> that happens, right? >> it does happen, but the question -- i think becky raises the right one. is it goose he wigle's fault, do back and forth, and if you're r and r donnelly, how do you make it up to them? do you fire r and r and use somebody else as a point of pride? do you say next time this isn't going to happen? >> someone yesterday was saying is the selloff -- how much is related to how bad the numbers are and just how much to the way that the newspapers came out. >> i think it's the numbers themselves. >> i don't understand why the street was so far off on that. >> an analyst says google is
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above all others. in hindsight he'll say not surprising. but earlier this week, it was google is the one who will never stumble. >> you have the mobile problem and the motorola problem. >> mobile is a bigger problem. >> if you could see what was happening in facebook shares yesterday, same issue because it's clearly impacting everybody. nobody be's figured out a way to make a dollar. >> and other analysts have said i don't understand why google would be different. if you're worried about mobile and how nobody has figured out how to make money off of mobile and get the ad space there. >> has anyone gone on to google today? if they had a sense of humor, it would be -- >> 1987 crash? >> no, they would be mocking themselves.
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>> there is nothing on there today. straight old google. >> maybe next use on the anniversary of. >> i know we'll keep doing that. i was there. where were you in 1987? you were in like fifth grade. >> i was president of the spanish club. >> i was 11 years old. no, 10. >> fourth or fifth grade. >> i was under my desk with all my clients calling. and when i'd pick up the phone, they would say joe kernen there and i'd go-will-what number were you trying to reach? no, this is not ef hut ton. no, i answered all my calls.
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but it was frightening. do you remember why it happened? it was an intersection of two things. one was this portfolio insurance which meant no one was ever going to lose money again. and the arbitrage between futures. so every time someone would put on more portfolio insurance by selling futures, the futures would go further below fair value and then people would put on the arbitrage p. and then it would go down further and then people would put more insurance on and it kept happening and happening. and there was some warning before the week, but we didn't know you could lose 600 points in a day. because -- and by the end of the day when you're expecting to come back and like the dow, i had the dow stocks on my screen and they went to numbers that were not -- like single digit numbers. for the next week every morning, the futures you'd come in and they would be down 300 points. and we were like at 2,000 or something. and it will be down another -- >> is that before they had
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limits? >> no, it was right after the earthquake in los angeles, too. >> they didn't have limit down or up in the morning? >> not then. >> wow. >> and it took two years before we really rebounded. finally did come back. but crazy. it's been 25 years and it is the 19th. not sure we like look back, but -- i don't know. hopefully history doesn't rhyme and sdwdoesn't repeat itself. we'll hear from general electric and mcdonald's before the bell. 8:30 and 8:00 eastern. a few other stocks to watch include microsoft can reported after the bell last night. earnings here also falling short
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of consensus as sales of computers running windows operating system dipped shares did come back. and sandisk reporting better revenue. a limited supply drove up prices for flash memory. amd reporting a bigger than expected loss. the company announcing it will cut it workforce by 15% second round of layoffs in less than a year. amd now forecasts a drop in fourth quarter revenue worse than wall street expected. shares of chipotle falling in after hours trading.
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earnings fell short. can you translate this? you were head of the spanish club. the last sentence. >> are you kidding? >> you were head wih of the clu. >> do you remember what i remember? shut up, you have nothing in your head. >> you know what i know? >> yeah, you can't say it on air. >> yes, i can. smch [ speaking spanish ] it's welcome parking lot. why conditioan't i say that? i know it in greek. >> okay. all right. >> that's like 30 stisyllables it's like welcome parking lot. growth will cool in 2013 at chipotle and earlier this month, da
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david einhorn said it was an attractive short saying it will face significant competition and additional costs. >> by the way, he may be right that the stock should go lower -- >> have you ever been to chipotle? >> all the chipotle. but he said they're supposed to compete with taco bell? his argument was taco bell was the stronger competitor. >> i do love taco bell. >> i love taco bell, too. >> but did you put them in the same category? >> they're both mexican. they're both kind of -- are you allowed to say gringo? i think it's he a negative for me. but they're both still versions of gri this. gringo, of what we think is mexican food. >> let's get a check on the markets. futures a little bit in the red. not major declines, but the dow futures down by about 16 points. s&p 500 off by about three.
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nasdaq down by about 12. in europe, similar sort of moves. france cac done by 15. dax by 34. in asia, you saw these markets ending mixed. hang seng up barely. oil prices down about three cents. the ten year note is yielding 1.# 1%. dollar higher across the board. right now euro at 1.3037.1. 1%. dollar higher across the board. right now euro at 1.3037.1.1%. dollar higher across the board. right now euro at 1.3037. gold prices right now down by about $10. $1734.20 an ounce. p. >> if you put in google and then you start with s, you get google scholar search, street. if you put sc, you get scholar,
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science fair. if you put scr, get -- you have to get all the way to google screw before and then a lot of google screw ups come up. but -- >> and it's not what you think. the first search is -- >> no no. >> they can control their own google search. >> let me start with google f. no. that's google finance. google fusion tables. >> if you you do google se like sec, you get to google secrets. >> i'm talking about yesterday. >> i know. >> take off the s and put up. >> nothing. >> i guess they don't admit -- anyway -- >> joe kerr then. kernen. >> a lot of stuff comes up. no, just really good pictures of
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my hair. >> it is time for the global markets reports. kelly evans is this london. >> she's all business. >> andrew, joe, becky, hi, everyone. you guys were just talking about google and actually the impact of their early results release and the fact that they missed really has been felt around the world. asian stocks were lower. and if you take a look at the stoxx 600, we're shedding about 0.4%. to be fair, it is a lot of the banks which are among the weakest performers. but it has reverberated around the fwloeb. european bourses, not a ton of movement here, but the ibex 35 is the underperformer. this is basically the exact opposite of the move over the last week or two where the ibex was leading rest of the sector.
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eu's latest summit didn't conclude with anything big transformative, but there was progress on the banking union that basically acknowledged it wouldn't necessarily be in place by january 1st, although some details about regulating and at least super advising the banks under the ecb. germany, france, wide apart on a lot of the issues. we have seen losses pick up in about the last 60 to #90 minute. ftse 100 down. wanted to show you here is google down 6%. so not quite as big as the loss we saw yesterday. after hours trade, shares coming back a little bit. but analysts this morning say they're not expecting a knee jerk reaction back into the positive as people have a chance to sleep on that report. bond space, we are seeing rally continuing.
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spain's yield now 5.3%. italy, 4.73% for the ten year. in the meantime, gilts actually 1.9% rallying, too, but that yield has moved up quite a bit. and the german bund has flipped positive. people start to price the eu sticking together pretty much in an inflationary as opposed to deflationary outcome. likely to continue to be felt there on the german bund. and i'll leave with you a look at the currency space. euro-dollar over here despite what we have seen in terms of the bond market is more consistent with what we're seeing across equities. down about tenth of a percent. still 1.3049. and people looking at the yields that we're seeing and saying we could be at 1.35 before long. that's a far cry from the lefts of 1.10, even of parity. back over to you guys.
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>> did they have a chipotle in london? when i was there, that was the one thing that they didn't have. >> i said the same thing actually when i got over here. but they've added quite a few lately. there is a chipotle, one that opened about ten paces from me. so i see that one quite a bit. there's a really popular mexican chain, too, and that has tried i think to get out early on the chipotle market. and an upper he said mexican restaurants starting to open up. so the mexican space here is getting more crowded. >> is it a rip-off of which i poet what chipotle? >> there are a lot of similarities. i'll leave it there.
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>> the hagus fajitas are the most popular. heart, liver and lungs all sizzling -- what? >> people are eating breakfast. stop it. >> are they eating hagus? >> no. >> they're the most popular in scotlan. it's sheep heart, liver an lungs. coming up, google analyst joins us with his take on what really happened yesterday. we'll see how he explains completely missing what happened. but first, the year was 1987. the dow crosses 2,000 for the first time. al wlan greenspan begins his tenure. berkshire hathaway hits a high. an oliver stone's wall street is released in theaters.
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>> this song is on the first cd i ever bought. >> did you do posters? >> no, but i had cds. >> buddy fox still in his 100 hookers. one of the top songs, bon jovi's living on a prayer 25 years ago today. the dow dropped in its biggest one day percentage fall and it was 587 points. we'll be back. ♪ [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪
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google's blunder cost the company more than $20 billion in market cap yesterday. ken, obviously there's a lot of moving pieces here. early release is one thing, but the drop in the stock, do you think it was based on the early release or just what was actually in those numbers? >> i think the numbers. we were expecting a much better number for a core advertising and motorola and where we came in and were surprised by the strength in the dollar across all currencies and how that impacted the core advertising business. >> how did that impact? >> it was about 600 basis points for the company. so if you adjust for that, core advertising came in closer in line. so i think the concern, and this is about lower cost clicks on
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mobile, i think some of that was overstated a little bit. i think there's a gap in terms of pricing between desktop and mobile, but in truth, i don't see this quarter as proving out to be any sort of headwind that google could be facing. i think mobile is probably best positioned within mobile advertising and i think if you look at the results, clearly mmi was a miss on the streets. currency was a much bigger factor. if you break down the miss, about half went to motorola, half went to currency. and i think if you look at some -- >> the cpc was lower than most were anticipating. >> we were expecting to be down about 12%.
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it came in down about 15%. we also underestimated currency by about 4 o00 basis points. >> just looking at the cost per click, down 12% is pretty stunning alone, but down even weaker, how big of a problem is that? >> i don't think it should be that much of a focus because when you look at the paid click growth, it grew 33% year over year on a much tougher comp. still very strong volume growth and one of the things they did in the quarter which was very significant is they really started to push something they're calling product listing ads. they're taking inventory from their advertisers and they're basically changing the ad format and they did a test this quarter and they can't charge a lot of advertisers for it. and i think that is important because it took up very valuable real estate on the google site. so i really look at what happened this quarter and i sort of break it down into three buckets. it's not roll motorola. currency and a lot of site changes the company was making which longer term stand to drive
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much higher conversions in pricing, but near term, somewhat of a sacrifice. so nothing changes for me fundamentally and i certainly don't think it places google in a position where all of a sudden we're questioning their ability to monetize mobile. especially when they posted a number of $8 billion run rate, too, which i think is extremely impressive. >> is motorola fixable? >> right now i think investors are by and large somewhat disappointed in terms of the loss that google posted on motorola. i think there are questions about really what it will become. >> did you think they would hive off the hardware? some people thought they were buying it for the patents. >> no, because i think when push comes to shove, if they really wanted to just buy the patents, there probably would have been a way to do that. i think they bought the hard way because they felt it was important to have a strategic chip in the discussion with their hardware partners, that if push came to shove at some point down the road, that google had
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its own path, also. >> so you think in terms of the hardware, though, in terms of rolling out some of these devices, this is a good plan, you want to see more of this? >> i think right now for motorola, i think that there is some judgment reserved. i think in terms of the core advertising business, i think that that is where google remains really well positioned and i think that for motorola, as long as they can operate that business at a profit neutral, i think we'll reserve judgment there. >> on android, they're spending so much money on android successfully in terms of market share. there's no real money in it unless you believe basically they're just expanding the pie because more people have devices and therefore it's better for their business. is there ever a day where they actually will make money off the android itself? >> i think for now google whether continue to focus on making money on usage. and i think for them to charge based on the operating system, i don't see that coming anytime soon. i feel like for google, they're
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very pleased with the overall indirect monetization and they have something in terms of that can capture -- >> i've heard the flip side that ultimately hardware makers may actually charge them to use android in the same way that microsoft is basically paying nokia at some level to take its operating system. >> i think that's interesting, but that would also argue the earlier question about why would they make the decision to buy motorola themselves then. if it came to where they felt like they had some resistance and pushing their own operating system, which they feel is very strategic for all their other commercial products, then they have their own path, too. >> if you think that these problems were overblown and that there is not as much to worry about here, i guess you'd be buying with the stock down? >> i would. if there were something that happened in the quarter that made us feel different fundamentally, we would certainly be reviewing our position. i think as we look closer at the numbers, nothing to us really seemed very secular.
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mostly it felt all temporary and i think that it's set being up you then for a pretty good rebound. >> ken, thank you. coming up, we'll get quarterly results from ge p. always an primportant read. and another hit from 1987, only in my dreams. ten debbie gibson this morning. >> the u.s. is the largest business travel market in the world, but that's all about to change. in a new study, china will become the number one business travel market overtaking the united states by 2014. mike mccormick explains. >> it's the amazing rate of y t growth in china. they will become the largest. >> forecast to grow nearly 15% in 2013. what is fueling china's travel boom? head over to roadwarrior.cnbc.com.
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welcome back to "squawk box" here on on cnbc. general electric reporting earnings of 36 cents a share on ap opera an operating basis in line with expectations. it is up 50% or 13% if you exclude the effects of a preferred stock redemption back in the third quarter of '11. revenue at the company was $36.3 billion. that is up 3% if you exclude
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foreign exchange effects, it was up 6%. fx negatively impacted revenue by $1.1 billion. the first call estimate was 36.935. and this is 36.3. so versus first call, it is about 500, 600 million light. executing the company says on its growth strategy because the industrial segment organ he can revenues were up to 8%. 10% year over year. ge capital is something people always look at. earned $1.7 billion. that was the unit that rented most of the problems during the financial crisis and the company had been attempting to shrink, but 1.7 billion up 11% from a year ago. >> both ge capital and the industrial segments are on track
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to deliver double digiting earnings growth for the full year. >> for change in the company's outlook.growth for the full yea. >> for change in the company's outlook. on track to deliver its growth in 2012. i don't know whether we expected the company to say something contrary to that given what's going on in china. >> after what we've heard from companies like cummings and caterpillar, we did look at general electric as a good proxy for what's happening. and the overall environment remains challenging is the comment. >> it says 8 b.4 billion was returned to shareholders. i don't know whether it's time to hear about a dividend increase or not. even though i have as an employee, 21 year employee of general electric and now 49
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percent, i have actually some general electric stock, but i don't know what the next difference tevidend hike was be probably look at it closer. joining us chief investment officer at harvard advisory. what was the last dividend hike, jack? >> we had that in the spring, joe. >> so when is another one due? >> i thought we were going it see one in this fourth quarter and we still may. they had two dividend increases in 2010. two in 2011. and one so far this year. >> and one of things that recently happened at ge was that ge capital started paying a dividend again to the company and that a lot of people would allow the company maybe to increase the common difference denied again or more frequently for shareholders. so that goes into this, as well.
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i mean, it still could happen. maybe not. i don't know what -- we did hear from jeff immelt that the environment remains challenging. maybe you keep a little in the piggybank at a time like this. >> well, the guidance from mr. immelt has been that the shareholder dividend would grow came com ms. rat with earnings. so it would just keep the shareholder dividend growing at the share rate. >> you're shamelessly talking your book. >> this is a good greer ge.
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the remix portfolio is really doing well. however, this quarter will seen as a disappointment for shareholders and that's primarily because the infrastructure review that mr. immelt was presenter at on the 27th of september was very bullish. and i think analysts, including myself, got ahead of ourselves on what to expect for this quarter. so i don't expect the shares to get too excited about this today. >> what number reflects that it wasn't as positive as you thought? the revenue number was a little bit shy, but were you hoping for more than 36 cents? >> i was. and i was hoping for more than 36.3. and it came from hearing at the infrastructure review that infrastructure organic revenue growth was going to proximate 10% this year and be 5 to 10
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next year. which was the top end of expectations. close to 30% for the year, so still outperforming the s&p very nicely. i'm afraid we might see shall give back. >> 2281 the close. 2236 is the bid. 2250 is the ask. and 2218 where it closed was only like 40 cents or so off yearly high of $23.18. so you're seeing down about 34 cents. so when you say infrastructure, you're not talking about the industrial segment alone, are you? >> no, the infrastructure component, the piece that is
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really performing well is the energy infrastructure piece which includes the oil and gas. that represents about 30% of total corporate revenues. >> because the industrial is up 8% and year to date it's up 10. and if you were to back out fx, it had an effect of 1.1 billion. then you've got 6% growth in revenue and industrial growth of 9%. but you still wanted more, huh? you're greedy. >> i am greedy. again, 30% year to date total return up until last night's close, joe. this is a good performance. however, slightly less than what i was hoping for after that infrastructure review. >> okay. jack, we'll leave it there. 22.40, we'll see by the time the day is done how the -- where the
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shares close. but we appreciate it. >> thanks for having me. >> you've lost -- you're like daddy war bucks to me. >> that's like 1987. >> you look pretty good-bye comparison.bucks to me. >> that's like 1987. >> you look pretty good-bye comparison. >> i worry about here and here, but in this two shot, aim not that worried. >> there you go. >> comments or questions, squawk@cnbc.com. 25 years to the day since black monday. we're listening to hip to be square. we'll take a quick break. googles earnings release mistake raising a number of regulatory red flags. we'll talk about a former enforcement attorney to explain what's going on next.
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but first, president obama and governor romney attending the al smith dinner in new york last night laughing together. they never laugh together about anything. but this is about their first debate. >> everyone please take your seats. otherwise clint eastwood whether will yell at them. >> of course i'm pleased that the president is here. we were chatting pleasantly this evening as if tuesday night never happened. >> as some of you may have noticed, i had lot more energy in our second debate after the nice long nap i had in the first debate. >> i was hoping the president would bring joe biden along this evening. because he'll what laugh at anything.
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mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer.
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honeywell also out with earnings. reporting earnings at $1.20 a share. that beat expectations. revenues did fall a little short, but the company is also narrowing its guidance. now looking at 2012 earnings per share of $4.45 to $4.50. they talked about how some of the strengths they're seeing in high growth regions was partially responsible for offsetting some of the weakness in europe and lower demand for some products. >> we've been talking about google. blaming r and r donnelly for yesterday's early announcement. but should the sec have caught this before google's numbers hit the wire and what are the legal implications some jacob is a former sec informant lawyer -- enforcement lawyer and currently
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a partner at chum and rogers. welcome. you have to imagine that some yamoo will file a lawsuit, shareholders saying something. >> no question about it. and actually you have 1987 theme today. one of the most famous insider trading cases at the united states supreme court was a 1980s case involving a financial printer. so clearly there is fodder for inquiry, but based on everything that we've heard that this was somebody pushing a button inadvertently, nothing really should flow from this. >> but there are people who lost a lot of money, people who had certain lemt orders. there are things that happened as a result of this. there is no consequence whatsoever? >> well, there's always the potential for consequence depending on the underlying facts. but if it's a mistake, is the fact of the announcement of a release after hours the timing
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itself a material fact? i don't think so. so ultimately there really is nothing that can be done about this. and if you think about what has gone on for decades prior to this instant information generation where pretty much everything is done at the exact same time out of an abundance of caution, that earnings releases often preceded the sec filing of the information. so i really think this is, all hoe the although there may be harm in the market, people are trying to gain an advantage in trading and -- >> to the extent people gained an advantage, the retail guys probably had no opportunity to gain an advantage. >> agreed. >> and i'm assuming, though, if you're a he rretail guy and yout money, you're not a happy camper. >> and you are not a happy camper, but you're in the
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market. you're betting in many respects on what these earnings results are going to be. but ultimately when you're talking about human error, you were talking before about responsibility. >> how do you feel less about human error and more the other thing going on in the marketplace which is the spdrs. you have a number crawling the internet trying to look inside and find folders inside on a google, on a disney a year ago. they're not hacking because some of this is public, but they're finding urls that aren't supposed to exist yet. >> i think that's a function of access to information. and absent there being cases or regulations saying that it is not permissible to access information, if kept is in the public domain -- >> it's one thing to be in the public domain vis-a-vis you put out a press release, all
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investors get it at the same time. another thing going on which is that certain people are getting access to things early because they happen to stumble on it earlier than the next guy. >> and to take that -- not toom had political intel against at working trolling the halls of capitol hill for gaining information. but ultimately that's what the market is about. access to information.but ultim market is about. access to information.informati. but ultimately that's what the market is about. access to information. until there is something that says this information is off-limits, the assumption is that people are going to push hard to access that information and gain a better advantage because the information that is available or the people's available to access it is a narrowing field significantly. >> okay. ja jacob frankfrankel will, thank
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for being on the program. coming up, a review of the delegate all book of goldman sachs. >> i want those hours back of my life. >> so bad that you want those hours back. >> thank you for reading it for the rest of us. taking one for the team. >> where were you 25 years ago today? if you were anywhere near wall street or owned any stock, or if you were near the trading floor, it is not likely a day that you'll ever forget. memories from black monday all morning on squawk. number seven on the billboard, top 100 that year, white snake's here i go again. >> i have seen in concert, too. e numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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the ♪ we're back this morning, in the chairs. usually we read the papers. i stayed up late last night reading a book. former goldman sachs greg smith's tell-all book, expected to be on "60 minutes" sunday night and a blitz of media appearances. stayed up really late because i got a leaked advance company, and i want the time back. >> is it poorly written? >> no, it was not badly written. it's just boring. it reads like a diary and when
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you think that he was paid $1.5 million to write a book that's like his diary. doesn't say anything relative about anything. >> no smoking gun? >> the most interesting thing is his one brush with lloyd blankfein was, his only one brush with lloyd blankfein was in the gym bathroom and he said he saw him naked, and that was about as far as it got. he was in a hot tub at one point. >> with him? >> no, no, no, there's one he tries to do sort of scene in a hot tub, talks about his internship. it's like i feel in a way that he might have coned "the new york times" for running the op. ed. >> totally naked? >> how many people here can say that about you? >> most. >> my friend bill cohen who authored the book about goldman sachs just wrote an op. ed about
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this, his wife happens to be the editor-in-chief of the president of the publisher and he calls him a conman. >> saying he coned his wife's company? >> he coned his wife's company into this book. >> i mean in the gym, when i say that. >> it's not that i disagree with the book, it's just not an interesting book. >> lloyd's a nice guy but i'm sure i look much better naked. did you see that picture of greg smith? bring up that picture of greg smith. let me just see that again because i think that maybe i wasn't paying attention in makeup today. i didn't know why the photographer was there. >> oh, wow. >> they caught you before you put it on. >> people have been saying that for a while that, so i mean i never -- >> that's jack degan's head. your face looks huge. >> are you the greg smith?
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>> is there anything else in this? i can go on? >> whatever money you were going to spend on the book you can save it and if you were going to watch "60 minutes," you can have that hour back. >> you're speaking to four people that even know anything about this. >> what have you got? >> two more jokes from the romney and president obama, do we have shots of it? they looked really good both of them. you've seen the president down at the correspondents dinner. his timing is amazing. i've never heard romney, i didn't know whether -- >> whether he could deliver punch lines but delivered a couple, there is he. there's the president and they all look good and romney said it's nice to finally relax and wear what ann and i wear around the house.pretty good. my favorite from the president is mitt, is his middle name. gosh, i wish i could use my
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middle name. >> hussein. >> and a poke at ris his religi. he said usually when i get invited to things like this, it's to be a designated driver. you have been to these before? >> yes. >> to the al smith dinners? >> yes. >> i've never been to one. >> who gave katie couric that seat? >> she had a good seat. >> you don't know? the three of us should be -- >> do you have white tie and tails? >> i'll find a white tie. >> i'm sure becky has a beautiful gown. >> when i was younger i had tails but that was long, long ago. >> got to get you some tails. >> when we come back more of the
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the tech shock heard around the trading world. >> as you can see, a big miss from google and a big decline. >> reaction from a google shareholder on what happens now. >> finding the fix for the fiscal cliff. former mississippi governor haley barbour joins us this morning. we are rising above the rhetoric trying to safeguard your financial future. and disrupting the status quo. how this new tech startup is changing the way people find and book doctors. >> did anything unusual happen during my procedure? >> can you please define unusual.
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>> the second hour of "squawk box" starts right now. ♪ ♪ when i was feeling so, so bad ♪ ♪ i asked my family doctor what i had ♪ good morning, welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. searching for answers on google, the stock slammed after the company released earnings before the market close, profits surnlsurged by 25%. we'll speak to analyst paul meeks in a moment about the sell-off and whether or not you should be a holder of the stock or a buyer on the dip. the next hour, "business insider" henry blodget, on whether it's focusing on its or
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not. haley barbour will help us find solutions to solving the fiscal cliff. later this hour the doctor will see you sooner, zocdoc, how this disruptor is changing your office visit. we'll talk to him about tech and beyond. let's look at the futures this morning, we've got some red arrows across the board, dow 14 points lower, nasdaq off 13 points and s&p off as well. ge announcing 36 cents a share in line with expectations. revenue was $36.3 billion, light of analyst expectations. ceo jeff immelt says the overall environment remains challenging. ge is now a minority owner, 49%, of this little network.
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>> it's interesting with google the efficient market, wow, this stock it's telegraphing some really good things coming up. for the last month or two, nothing but going up. so why, what happened? why isn't the market anticipating all the news, congealing all the different things from everywhere, it's so efficient, and then, wow, it's telling you, it's telling you, look the market's telling thaw google is doing well and it totally blind sided. >> it could be blind sided by currency issues that, analyst comes as a big surprise the idea that would be a 600-basis point surprise. the motorola stuff, too. >> went from a $40 million loss to -- >> why do we think advertising was holding up for google? >> we thought it was a facebook problem. >> part of it is a mobile thing,
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part of it is this dollar issue. >> maybe jon fortt knows. wait a minute, he joins us from palo alto with more on yesterday's snafu. >> which you're not supposed to use. >> situation normally all fouled up. >> it used to be at wall street we weren't allowed to use snafu. >> it's fouled up, stuff we don't get. >> i think i am in san jose. i was in chicago a few hours ago i'm not completely sure but yes lots of explaining to do on multiple fronts based on what happened yesterday. our ceo telling "the journal" this was human error, for them that's a lot better than a systems problem since they handle so many sec documents for so many different companies. google getting on the call explaining just what this quarter was about from their perspective, and andrew you
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touched on a few of these things, mobile a big issue in terms of cost per click. they trotted out the number an $8 billion annual run rate for mobile, shows that global is growing, it just has some impact on the money they're making off of advertising clicks and also touting youtube growth in the quarter, so we got an interesting situation now analysts reaction to this number, analysts bullish on google before. still bullish gene muenster with piper jaffray. he expects them today to send the stock back above 700 but to wait before sending it too much higher to make sure the growth story is still intact. oppenheimer downgrading the stock to market perform, for many of the same reasons but looking at this mobile issue, subsidies for the nexus tablet, impacting advertising profitability and then motorola, i mean that half billion-dollar operating loss, something that
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people are continuing to be concerned about now that this is entirely a part of google, guys. >> all right, thank you very much, jon. obviously google's ceo, larry page, apologizing for that mistake to led to the company's quarterly results released early. shareholders are worried a lot more about than this error. john meeks' company owns about 84,000 shares of google, about $64 million. based on what you heard, not just knee-jerk reaction but looking through the numbers is this a stock you'd be selling or holding on to? >> first of all we own the stock is at about $4.50 and have low turnover so we hold stocks for years. if i was to give you a recommendation today i would say a hold. i like the stock long-term but i don't think with the cross currents it's anything you should be buying now. >> what concerned you most? we spoke with an analyst from
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evercorps earlier, he said looking through this was from a currency headwinds he hadn't been anticipating to the tune of 600 basis points, part of it was the motorola situation, not knowing what was happening there and he attributed a small part of the surprise to what was happening with mobile, but of those issues, what concerns you the most? >> what concerns me the most probably is the rate of decrease, which has not troughed yet in the cost per click, that went negative on a year-to-year basis beginning in the december of 2011 quarter. i'd like to see that stabilize, and then second most is probably motorola but ever since the company bought motorola in may it was known that this was a losing company. they were bringing on about 17,000 motorola employees. now google has about 54,000 tot total. they've announced they'll cut 4,000 of the motorola employees, i would probably cut more over time and expect that
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profitability not to ever be google like but to lift somewhat. >> was the motorola purchase a good one? >> pardon me? >> was that motorola purchase a good one, from your perspective? >> boy, that's a very good question that you're asking. obviously in the short term you take something that is highly profitable, generating a lot of cash and add to it something dilutive because it's burning a ton of cash. short term no. long-term, i believe like the tech sector the strong get stronger and this is a company that needs to guarantee to its customers the entire experience of hardware, software and services so over time i think they're probably doing the right thing. >> and you're a long-term shareholder so you will give them the benefit of the doubt on that? >> yes. of course as an analyst i watch the stuff not only on a quarterly basis but a daily basis. i always have opinions and opinions change but i think we need to give them the benefit of the doubt. they only closed the motorola
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deal the third week of may. we had one full quarter of the google fold in the september quarter. it's not going to be quarters, it's probably going to be years. >> the cost per click is down 15%. >> that's right. >> the analyst was looking for down about 12% but this is something that a lot of people are saying wait a second, there is a bigger problem here. we thought this mobile transition was only going to be a massive problem for facebook. google could get caught up in this as well. when do you expect to see a bottom out? >> well, what happened with cost per click is in the june quarter it was down 16% year-to-year, september quarter it's down 15% year-to-year so you could say the rate of change is starting to moderate. obviously mid double digits is still a pretty big decrease. i think it's going to play out again over time, not in quarters but maybe in a year or so, and remember, this is something that even when i've been on cnbc
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talking about facebook, this whole transition to mobile is not a google specific problem. it's not a facebook specific problem, it's such an embryonic industry, it will take time to see how we take revenue dollars on mobile ads and convert that to cash flow and profits. you don't know that, i don't know that, i don't think the managers of these particular companies know that yet. >> again, though, you say at this point with google you look at it as a hold recommendation because while you're a shareholder you got in at $450, so where it is now obviously still up from that. >> yes, but i think that the company still can probably do maybe even as early as next year, $50 earnings per share. i think even at a slower growth company that standalone google is, you should put a 15 multiple on that. i think that's reasonable. you add their cash per share which is now $124, it grows about $12 per share per annum and i still get a stock in the
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mid 800 range. >> paul, thank you very much for joining us today. appreciate your time. >> thank you. >> even when you guys read the abercrombie & fitch, the story? >> no. >> he's got a great jet and after reading this i don't know whether to buy abercrombie stock if i could or sell it. >> tell us more. >> number one in the manual, which is 47-page manual on aircraft standards, male staffers on the jet need to be clean shaven, must wear a uniform of abercrombie polo shirts, flip flops and a spritz of the firm's cologne and boxer briefs, all must wear sunglasses. stewards that are serving meals if they're setting the silverware the gloves need to be black, but to set the table with the plates, they have to switch to white gloves at that point. toilet paper cannot be exposed and its end square cannot be
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folded, that's an absolute no-no and if they travel with their dogs, he and his, somebody else that goes with him, his friend, if ruby and trouble travel together, ruby will sit opposite michael in the cabin, in sammy's seat. however if sammy does travel, then ruby will sit in trouble's seat so that's all outlined where the dogs sit depending on who is on the $50 million jet. >> if they make a request the reply has to be "no problem." can't say "just a minute" can't say "sure." >> after all of this, i have decided that abercrombie is a buy. >> because they're that organized? >> yes. >> they've got their act together. >> yes. >> there you go. >> i think i admire this dude, just the nerve. he's got it going on. this guy is cool. >> i'm worried you're going to get inspired and have a manual for us on monday. >> for the show i'm going to do it, a damned good idea, 47
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pages. coming up, we'll welcome our guest former mississippi governor haley barbour. >> one glove, one surgical glove. >> he'll be joining us to help solve the nation's fiscal dilemma. the squawk trading block is ready to tell you how to play the markets. we are back after this break. welcome governor. thank you for joining us. boring. boring. [ jack ] after lauren broke up with me, i went to the citi private pass page and decided to be...not boring. that's how i met marilyn... giada... really good. yes! [ jack ] ...and alicia. ♪ this girl is on fire [ male announcer ] use any citi® card to get the benefits of private pass. more concerts. more events. more experiences. [ jack ] hey, who's boring now? [ male announcer ] get more access with a citi card. [ crowd cheering, mouse clicks ]
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hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business.
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today marks the 25th anniversary of one of the darkest day in history, wall street, october 19th, a monday, the dow dropped nearly 23%, the biggest all-time percentage decline. the market cap loss that day, $503 billion, doesn't sound like quite as much today, heavy volume backed up the nyse ticker for 90 minutes, a record at the time, 604 million shares changed hands, that was a problem because nyse computers were only equipped to process 400 million shares per day. throughout the morning we'll look back on this day in history unless we actually get some news here today, and where stocks will go from here. otherwise if we don't we'll still keep talking about this. >> the abercrombie guy when you get on the plane, what song has
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to be playing? phil collins "take me home" has to be playing the second you get on the plane. >> i was confused what if you are home and going someplace else. i would play it if you're somewhere else and play "take me home." is that wrong? >> it's "the new york post." i don't know. >> i can't believe this is -- that's your story, for me to bring it up for something you haven't seen. >> i don't know how i missed it. i was read that awful greg smith book last night. >> now you love this. >> i do. >> how do you bust a guy who is not wearing boxer briefs? how do you know? >> panty lines. >> no, because those guys have it sticking out on purpose, that's part of the whole thing. >> the fear of going over the fiscal cliff, haley barbour agreed to come on, i don't know if he's seen the show but former governor of mississippi, now a founding partner, we'll talk about the fiscal cliff and politics and everything else and what i remember is just what a
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rock you were during katrina and thereafter, and in contrast to some of the other people that were in a position at the time. >> our people are tough, and we got, we bore the brunt of the storm but our people just got knocked down, got back up and hitched. their britches and went to work. katrina was an awful disaster you wouldn't want to happen to your worst enemy but it brought out the best of the character in our people and it showed. >> i think we're in agreement on this, on the fiscal cliff we're not proud about kicking, and you talk like that i'm going to talk like you because i'm from cincinnati, and kentucky is right next door. we're going to kick the can down the road because we can't solve all of the big intractable problems by the time we need to solve the cliff. we need to get a stop gap measure in force and get down to
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business however long it takes to fashion some bipartisan agreement. >> well i think that's unquestionable. congress always wants to kick the can down the road if you can. in this case you don't have much choice. the lame duck session is so short that you can't do tax reform, and if you're going to get our revenue situation where it needs to be and you're going to get our spending situation where it needs to be, those are very complicated. you have to reform entitlements, you have to reform taxes. i was in a reagan white house when we did the last big tax reform bill, 1986, it took almost two years. >> we look back and think it just happened but that's not the way it was and we had tip o'neill at the time that was willing. >> and dan rostokowsky. reagan had a democratic house the whole time and he had learned how to work with them. we did the reagan economic plan, we did social security reform, we did immigration reform, we did tax reform.
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you don't do tax reform in three weeks or five weeks or entitlement reform, so congress deserves a little bit of a break here that they're going to have to ex-tetend their time but don extend their time more than a few months maybe until august 1st and if they've made real progress maybe to the end of the year but you can't kick the can down the road forever because the solutions then become so drastic. the president said on tv the other day that the debt wasn't a big problem right now. well if you don't deal with it right now, what you have to do down the road to deal with it is so, so hard. >> with the interest cost we have the benefit of very low interest rates. if the rates were to increase, there's the congressional budget office projects if we don't deal with it now you're talking about $1 trillion you're going to be paying out in just interest costs every year. >> that's right and we're dealing now more than $5
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trillion more in debt than we had just three and a half years ago. in the history of the country, run up $16 trillion of debt over $5 trillion of that in the last three and a half years, so that almost makes this exponential. >> i don't know who to blame either. i think back on reagan. he was never really mean-spirited or vindictive and things rolled off. people would criticize him and he'd laugh but i think the democratic congress was more easier to work with at that point. i think everybody's gotten pushed to their sides of the corners, right in. >> you got to have a president who leads, though. >> but reagan was never vindictive, never small, we would never say i won. >> he would never bring paul ryan and john boehner down to his speech and talk about them being irresponsible, terrible. in fairness, bill clinton
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understood how to lead in divided government. we did welfare reform, the first balanced budget in a generation but we have to have a president who has that attitude that i'm willing to understand that i got to compromise, and i don't get everything i want and i can't just throw -- we haven't had a budget adopted by congress in three years. >> but they were awfully close, boehner and the president, at that point it sounded like they were right there. >> neither side could have delivered probably. >> and of course there are two sides to the story about what broke the deal up. but the fact of the matter is, this is not just like one brunlget deal. we got to have a budget every year. it is unserious if you have an administration where the debt and the deficit is one of the biggest problems facing not only the country but the world, the american debt crisis and the president doesn't even seriously try to get a budget passed. >> governor, stay here. we will be back with more from mississippi governor haley barbour. as you're reading this, can i
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give you instructions? we don't have time. no, but read it with one hand like this. i've got some strange requests for -- coming up, xwoogle sell-off spurring market investors. what stocks are you buying? are you buying more google? inside into yesterday's snafu web we return.
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♪ welcome back to "squawk" on a friday morning. let's talk about sports thursday night and let's talk about football. the san francisco 49ers beating the seattle seahawks 13-6. their running back frank gore with 16 carries for 131 yards and also had 51 yards receiving. tigers swept the yankees, boo! to advance to the world series. they are awaiting the winner. probably looks like the cardinals will get it. cardinals/giants nlcs. >> i did feel good after the tigers, the team came out and talked about it. >> justiner ha verlander and th
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yankee team, whether it's jeter or not, they didn't even show up. they did not even show up. it was a no hitter until the sixth inning. >> looks like the cardinals take a 3-1 lead, they could close the whole thing out tonight so we'll see what happens there. if you have any comments or questions about anything you've seen here on the show e-mail us at squawk@cnbc.com, follow us on twitter, @squawkcnbc is our handle. up next we'll play oil and equities with our trading block. stick around. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪
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♪ you'll be swell, you'll be great ♪ ♪ gonna have the whole world on a plate ♪ welcome back to "squawk box" this morning. i actually knew ethel merman. i met her when i was 4 years old, i was born at roosevelt hospital. >> it was like $4. >> and some-odd cents. >> so sweet. >> they invited me to the ribbon cutting ceremony and ethe ethel merman was there, there's a picture of us together. >> you got to bring it in. >> we were in one of the local newspapers they said the little donor with the other donor,
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anyway. that's my ethel merman story. >> do you remember that day? >> i wonder whether i remember it or i see the pictures. >> that's amazing. get you caught up on the headlines we talked about it earlier but it may impact the markets today. general electric reporting third quarter earnings in line with estimates. solid demand in the u.s. and asia for electric turbines and railroad locomotives helping offset europe's woes and honeywell posting a better than expected profit. it is also tightening its full year earnings forecast, tightening it up to $4.45 to $4.50 a share. the street was already at $4.50. a new nbc news/"wall street journal" poll this morning of a couple of battleground swing states, in iowa obama leads romney 51% to 43%, inis with business the democratic
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incumbent leads his republican rival, but joe as we discussed before the show you look at what was it real clear politics. >> for the first time -- >> romney has more electoral votes. >> there's like 136 up for grabs. it's like 206 to 201. i don't have the exact number but 206 romney, 201 obama but there's a huge amount that are up for grabs. >> it will be a close race likely. >> the gallup, you read "huffington post," gallup is 52-45. close to the university of colorado prediction to like scary close to where it's supposed to happen. but you know, "huffington post" trying to explain the jarring results from gallup. what? this can't be! you can just see they're panicked. >> you know who works at the "new york times" and does the
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statistical analysis, he was up 70% chance for obama just recently brought it down to 66% so i don't know, but again that doesn't -- >> the oddsmaker in vegas. >> that guy in vegas thinks double down on romney. >> going to to be a rout. where are you? what do you think really? >> i would rather have romney's hand right now than obama's. i thought this is either going to be like 1996 when the democrats disqualified dole early on. dole was never above 43 in the polls, even though clinton only got 49% you had ross perot got 9% so it wasn't close or it was going to be like 1980, people didn't want carter but didn't know if they wanted reagan. reagan was 14 points in the spring, nine points in august. in the end people decided reagan's okay and he won by 10 points. it's starting to look more like 1980 in 2012, than 1996. >> that first debate was people
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got more of a comfort level with romney, less than the president was, didn't show up. it was more about hey this guy is not so bad. it's hard in the subsequent debates to reverse the gains from that first debate. i don't know if it matters as much. people saw that and a lot of them at that point, that hardened their view that made these guys all right. >> at cnn, which is not exactly a republican mouthpiece. >> no. >> cnn's poll showed by a small margin people thought obama won the debate. but then on every other measure they thought romney was who they wanted for president so that's again consistent with 1980. >> i used to call it the clinton news network, cnn, but now he's gone so i had to switch it to communist news network. you probably can't say that. >> i like watching cnn. >> did you see them talking about candy crowley, she was superior and the only people
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that questioned anything she did were people whose guy had a bad night or whose guy didn't have as good a night. that's why they're completely lost in the wilderness. >> candy crowley did a better job than jim lehrer. in the debates somehow the president ends up with five minutes speaking time. >> but romney somehow got 500 more words? and talks faster? >>. >> when she snapped and took the extraordinary step of correcting one of the candidates on what she said was a factual matter and we all know the first two weeks what they said about benghazi. when she said no the president's correct saying he called it an act of terror that next day, to defend that is -- >> people don't always notice what she said but didn't she say but i thought she said she made the correction -- >> the right word.
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she scolded one of the candidates and told them you're factually incorrect, sir. >> i used to try lawsuits for a living and one of the things i noticed was obama got to go last eight times out of 11 and everybody's been in the advocacy business it's always to your advantage to get the last word. >> i thought that was decided by the coin toss at the beginning. >> it's what he said but he went first six times. romney went first five times but then it ended up obama went last eight times because he interrupted or she let him cut in. >> i see. >> the moderator gets to pick the questions, the undecided voters. i remember those bush years, they were the worst of my life. how will you be different than that? that's the undecided voter she picks and what was the other one? outsourcing governor, you are the king of outsourcing. she had to pick the questions, too, andrew. >> but you know what, joe? romney actually, in many ways that helped romney. romney handled those pretty
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well. it's not always bad to get asked a hard question if you're prepared to answer it. >> i thought martha was great. >> raddatz. >> she got control. >> she gave equal opportunity punishment. >> her first question was a pretty tough one right out of the gates, too. the google surprise took some of the wind out of the markets, that trend seems to be continuing a little bit this morning. let's get to our trading block. joining us is david mcelvaney and bob iovino, bob, what happened ned with the early release and how that caught so many people off guard but when they actually saw what was in the release maybe that was a little more concerning. >> well i think it was. in the release there's human error in the markets still as computerized as it is and some of the limits and the stops that maybe might have been pulled out of the market, some of the manual ones, not the automated ones.
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the automated ones still would have been hit so i think that sort of flash crash in google would have happened anyway, maybe it would have saved a percent or two, i don't know that it would have gone down 8%, 9% but the release is the key and that's why you're not seeing it rally back really hard overnight. >> okay, and david, when you look back, we're also kind of reflecting on what happened 25 years ago today, this is the anniversary of where we were back in 1987 and what happened there. we worry all the time about october. do you have any worries of a repeat, a bad crash in an october like this? >> i think when you look at the last few months we've seen lower and lower volumes, eerily reminiscent of the summer of '87, we had similar patterns in 1907 where volume tapered and prices were climb so long it does represent some frailty in the market and we would have some concerns registered there. >> what would be the next shoe
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to drop or next signal we should watch? >> when you look at a crack in the system like google, when you look at different equities that are twitchy so to say and you see major volume pick up in price declines on a rapid basis like we had with google i think that is speaking to a certain twitchiness in the market. investors saying wait a minute, what are we looking at here, are the numbers that bad? oh, yes, they are that bad so earnings disappointments, if we see any more earnings disappointments you could see again 4, 5, 6, 8, 10% drops in the various equities. >> bob you agree with the assessment? >> i completely agree with david. i was looking at the last time the market acted like it's acted over the last week and a half, two weeks was back to march to may of 2012 and that preceded about a 12% drop. that's obviously not a technical prediction at this point, but what i'm seeing is the potential for the same type of attitude, the same type of market move because we're just not getting
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the highs and we're just not getting the volumes, with any sort of momentum to them, with any sort of bullish attitude to them. it's more like you need to buy it because the market's going to go up not necessarily because you believe in the actual fact we'll get new highs or the myth we'll get new highs whatever turns out to be true. the earnings have been pretty mixed, even the companies tend to be warning as they beat. so the moment toum the downside it's prime to get that sell-off, it bothers me that it happens right now in october as well, because there's always a little bit in the back of some of the older traders and ochres' minds like joe that it could happen again in october. october tends to be a poor month so it's disheartening that's what's happening but it is set up for that. >> bob we have seen some decent numbers and knew about a lot of concerns. everybody in their earnings release seems to be saying it's abuncertain market environment. that's hardly a surprise. we've been talking about that for a long time. >> uncertainty certainly doesn't bring buyers into the market.
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that's never happened. we always said the biggest enemy of the market is uncertainty. again the patterns you see on the charts are big blocks of sideways movement. i've had two short trades in about the last six or seven months, one of them worked and one of them didn't. i have long trades that have worked but fewer and fewer of them as we move later into the year. >> on that concerning note bob, david, thank you for joining us today. >> thank you. coming up next we'll talk business and politics, more with guest host haley barbour and then check in with the zocdoc, the web service helps you get in and out of your doctor's office fast. we'll talk tech and more with the ceo and the next hour of "squawk box" the governors of two battleground states, ohio governor john kasich and pennsylvania governor tom corbett will talk the election, after the break. [ male announcer ] at scottrade,
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welcome back. our guest host former mississippi governor haley barbour. we've been talking about the fiscal crisis that our nation is
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facing, and governor, you laid out some hard facts. you were there the last time we had a redo of the tax program that actually worked, 1986. it's tough to get there, but do you see some way we could actually get to that? >> i really do. actually i think simpson-bowles was a serious starting place. i don't agree with everything in it but why the president didn't go and put it forward is just beyond me, because there were a number of republicans that would have said this is a serious starting place. >> and it was two years ago. you understand why nobody's talking about it right now with the election. >> people are talking about it right now, but -- >> i should clarify the candidates are not. >> they want to talk about what they are for and that's fair but everybody knows even if they won't admit the president's compromised. i ran a political office in the white house for ronald reagan. he compromised everything, often considered until obama the most ideological president of our lifetime, he compromised on everything because he had to.
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he had a democratic congress. it would have been much better two years ago if we had had this debate with two years to work through the details but we didn't and that's why i said earlier it can't happen in a lame duck session but we better lay the ground work that we're not kicking the can forever but that in the next few months of 2013 we have to deal with this seriously. spending as well as taxing. >> but most of the people that we've talked to even someone like dave cote of honeywell who was here along with former senator sam nunn they said the way they see it happening is the congress in the lame duck session or just ever agrees to a simpson-bowles type of sequestration six months from now if they don't reach a better compromise between now and then. simpson and bowles will say you can't raise taxes now. you have to push that a couple of years down the road. all of this is setting up something that maybe we see actual changes two, three years from now? is that the best we can hope for? >> no, i don't think that.
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first of all you were right, the only person who says we can raise taxes now and not hurt the economy is president obama, who for four years repeatedly said we can't raise taxes in a weak economy and we have a very weak economy going 1%, 1.5%. >> people say under 250, no. they love those bush tax cuts and they somehow make this tortured argument we got to keep those or it's really bad but we got to make sure -- it's so bizarre to think they know anyone over 250 saves it and doesn't spend it, they know there's no small businesses that could be impacted? >> why they're surprised there's no job creation when you have job creators threatened with the largest tax increase in history. >> only 2% small businesses pay and then 54 -- >> when people say broaden the base you have to raise taxes on everybody. >> eventually. >> but eventually you do but my question is, then we made the argument about job creators, so when do you do it? >> you better do it in 2013,
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because the markets, the economy will not wait. and whatever they do the kick the can mechanism i believe will pay for the sequestration that's already been enacted for the period of time that they think will, it will take to get to finality. $107 billion for a year, $55 billion for six months. i think those cuts will be made in the lame duck. they better be. >> governor, thank you. we have more to come. coming up next a disruptor in the doctor's office, drop the clipboard and see the doctor faster. find out how they do it next and top of the hour, henry blodget on google's miss. should it leave the gadgets to apple? he'll be sounding off at the top of the hour. all energy development comes with some risk,
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welcome back to "squawk box." we're continuing our disruptor series and the question is, are you putting off booking a checkup with your doctor because of all the hassle? well zocdoc the web-based booking service makes it easier with their check-in function. joining us on the set is the co-founder of that company, cyrus massoumi, also the ceo of zocdoc. it is sort of like an open table, if you will, for doctors, right, if you need a doctor this afternoon, you go on your app,
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see what doctors are available around you and you say i want him. >> absolutely. >> or her i should say, i want him or her. does everyone know what open table is? governor, do you know about open table? >> it is. you see in mississippi we don't have this problem. >> i don't know about open table. >> you can get a table reservation. >> i'm on tv, i don't have any problem -- >> you can always get a reservation. >> in new jersey. >> how do you make money doing this? >> doctors pay a monthly subscription fee to access zocdoc, $300 per doctor per month. they get access to the physicians. >> are good doctors on this thing? >> absolutely. we have some of the best doctors in america. >> every good doctor i try to reach never has an appointment available for me. >> the interesting thing about that is that doctors have a high last-minute cancellation rate, 10% to 20% of the time, doesn't matter if you're the best doctor, 10% and 20% of the time
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patients will cancel on you in the last minute and ordinarily those times can't be accessible by regular patients to book them. >> i just canceled on a doctor a week ago. >> exactly, so one on zocdoc would know within a second that appointment was available and they could book that doctor instantly. we're adding supply to the health care system. >> am i going back to the regular doctors i normally use or going to use new doctors? >> both. so what we do find is when people start booking appointments on our site, over three years, 80% of their health care will be booked on zocdoc. >> this fascinates me and i'll tell you why. when you add 40 million people which we will do next year to the health care rolls and you add that much demand and don't increase supply, there's a likelihood it will be tougher to find specialists like it is in canada and other countries that do this. did you think about that when you decided, i mean this would help for people if there is a shortage and it's hard to, takes
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nine months. did you think obama care will make this more needed at some point? did that go into your thinking? >> i was a much simpler man when i started zocdoc, i was just trying to solve my problem. >> if obama care is not repealed i'm going to buy some of your stock. >> why are not people paying like on uber, you pay in the cab through the device, the credit card. wouldn't it be nice to walk out of the doctor. >> we want all of the doctors scheduling and booking the patients online. >> it's complicated to pay for a doctor, depends on insurance. >> do you say which doctor takes what insurance? >> that's a good thing. >> it's a requirement. people don't want to go to a doctor out of network.
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people go out of network because the perception of quality, we have ratings on zocdoc that are patient left and the one site on the web. >> you do all of this on hand held devices. who is the winner, apple or goingle? >> we do it on the web and introduced our first mobile app two years ago, the company is 5 years old and to some extent we're seeing i think everyone's the winner in the sense that mobile is really amazing. >> you're being so politic. i don't even want to say it. >> can i ask a question? >> yes, please. >> how much does electronic medical records affect your business, is that a big deal that doctor x can get the records from dr. y? >> i think there's an interesting thing about electronic medical records and it's sort of up to debate whether or not doctor's offices have actually been running more smoothly as a result of them because it slows a lot of doctors down. technology has not been there yet to really make doctors sort of work as quickly as needed but with our now check-in feature we
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released last week we can take a personal health record of the patient so what happens is, after people book appointments online they get excited and then they get to the doctor's office and have to file the forms and they fill it out and never have to fill it out again. >> cyrus thank you very much. for more go to disrupt disruptors.cnbc.com. >> you really appreciate it very much. >> i did and i will use it. >> it's like bernanke, it's devalued, that term is being devalued. i think he really did appreciate it. >> i appreciate this. this is real appreciation. >> you appreciate it very, very much? >> very much. >> when we come back, henry blodget sounding off on google's's earnings miss and the company's handling of the press release and take note the animal orchestra, wait a second, you didn't consult with us, south carolina over florida.
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i wanted florida. we just had the university of florida president. over my objections we're picking south carolina. they need to win to keep any chance of an sec title alive. this squeak understand's game ends a brutal part of their schedule and a win would open a path to the sec crown and a date in atlanta later this year. >> we'll get to rutgers later. >> the animal orchestra and joe apparently have spoken. from local communities to local businesses. the potential of yelp unlocked. nyse euronext. unlocking the world's potential. to a currency market for everyone. the potential of fxcm unlocked. nyse euronext. unlocking the world's potential.
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google's shocking third quarter miss. >> big miss on revenue, big miss on eps. the stock is getting wallops. >> henry blodget on the search giant's struggling core business and expansion into gadgets. taking the pulse of the swing states, we'll talk to the governor of ohio and pennsylvania, two states that will strongly influence the outcome of the presidential election. and we continue our "what's working" series with the head of north america investments for citi private bank, a group that advises a third of the world's billionaires. it's friday the 19th, the 25st anniversary of the 1987 market crash.
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the third hour of "squawk box" starts right now. ♪ ♪ here she comes now saying money, money ♪ mcdonald's is down about $2.36 after a four-cent miss on the bottom line, $1.43 versus $1.47 although things were okay on the top line, revenue was actually above expectations or at least in line, 7.2 billion versus 7.14. the company goes on to say that we expect the near term top and bottom line growth to remain challenging and foreign currency contributed to this, eight cents, right to the bottom line. >> eight cents, maybe more than analysts expected. because i was surprised with the
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google news to hear currency was a bigger swing than what analysts expected. you could back that out and figure it out but i don't see anything else in here that would show why they would miss by such a large margin. same-store sales we have. >> global comps up 1.9%, maybe people in china either they're not having a coke with their burgers or -- >> it's not china. it's the asia-pacific, middle east and africa, and australia, weakness in japan offset that but said strong in china. in u.s. the comps up 1.2%, in europe up 1.2%. in europe it was up 1.8% comps even though they had negative guest traffic. they must be getting pricing power that comes into that. in europe with all the troubles they had, people aren't eating out as much even when you get the dollar menu or euro menu.
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>> there was a great article, we have henry blodget in a minute, on his site, mcdonald's franchisees feel disenfranchised because they're spending a fortune to remodel the stores at the same time they offer the value meals. for the next two years a lot are projecting it will be a flat busithem. >> they do do mcdonald's really well in europe. it's a really nice store. people sit, stay there and eat. >> didn't even look like a mcdonald's in london. >> in paris either and there's huge lines. they don't have fast food down because they don't have fast anything down there but you can go to the machine it's kind of like health care you go to the machine, pay there and someone comes up and gets it for you. >> in the u.s. the september u.s. comps break it down on a month by month basis. they were weaker in the united states, up 0.7% in september and i believe you said the estimate was 1.7% the estimate looking for the u.s. so that shows you
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some of what we've seen. yesterday we had the southwest ceo, gary kelly on, and he talked about in september they did see weakness and pricing pressure problems from passengers who were looking to book but that turned around in october in the first three weeks. you wonder if that same sort of economic malaise that hit a lot of other companies in september was also a mcdonald's and what the trend was in october. >> they do retreat quickly. no, no. you know what? i'm not going to continue to -- >> surrender. >> i was kidding, they were a great ally. ge is reporting -- i didn't say anything about frog legs this time. >> nothing. >> ge reporting third quarter earnings of 36 cents a share, in line with analyst expectations. revenue was $36.3 billion, that was a little light of analyst expectations. ceo jeff immelt says the overall environment, we're hearing this word, it's coming around, challenging, challenging here, challenging mcdonald's. >> we heard it in a bunch of the
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ones this week. >> challenges, navigating through challenges. u.s. equity futures at this point are beinging somewhat impacted by what we just saw from mcdonald's, dated down about 2.5 points. we should mention whenever we talk about mcdonald's the all-time high 1.02. one of the best dow stocks to own. ge is down about 40 cents or more so you mentioned honeywell, not a dow component anymore, used to be. >> it's a $45 billion -- >> non that is also beating expectations. >> they had, you know what, revenue i think was a little light, too, and i think dave cote talked about a challenging environment, how they're trying to fight that by getting into long and short businesses in that release. >> you talk about google which if you google google screwup,
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almost nothing comes up. i got all the way to s-c-r-e-w. we tried f and f-u and -- >> the google minions have done a little handy work behind the scenes. google's disappointing earnings, investors wiping more than 9% off the company's market cap yesterday and joining us to talk about it, henry blodget, business insider editor-in-chief and ceo and our guest this morning, former mississippi governor haley barbour. good morning. >> good morning, thanks for having me. >> you're going crazy online. >> it was quite startling. i've been watching the markets closely 20 years, never seen anything like that. presumably a lot of people are positioning themselves right for the close and suddenly it comes out.
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>> we had a lawyer on earlier who said you know this stuff happens. the investor may get hit, may not. there's nothing to do about it. >> there's nothing to do about it. >> the stock did not drop because the earnings came out early. >> do you remember the other times that this -- i can remember at least five other times and it's really funny because it shows up on the website and the company has no idea. how does that happen? >> they were pinging the website every 20 milliseconds and they find it. never seen it released during the day like that. >> someone said something to one of the business, one of the wire services. it was a fake wire that talked about and then the stock sold off at the time and i can't remember which stock it was but it's weird the way you put out the company info, you have to be careful. >> it's the leak issue, or is it the numbers? >> the leak had nothing to do with where the stock is now.
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it traded to the level it would have traded out in the aftermath. it crushed people who were waiting to right before the close. >> the big debate has been thor uof is it the dollar, is that the issue, is it really mobile? is the mobile issue a serious issue in terms of people not clicking as much? >> i think the core business is fine. it was a little light, what you've been saying about everybody this morning, a little bit challenging. europe is crappy that, hurt them but if you would just for everything and boy, are they adjusting for everything in these calls now, they're impossible to follow, you come out, it was, eh, a little light. >> does that mean they're giving lousy guidance to analysts? why would currency be a huge surprise? >> because they have hedging, you have so many different countries, you don't know the exact amount in each country. it's hard to nail it, but again even when you cut through all of that, it was still a little light. >> are you a long-term bull on google given anti-trust issues
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and given all the other issues confronting this company? >> what google said on the call is we are moving to a multiscreen world. it's not just mobile or just the desktop. they are ideally positioned for that and search is the best advertising product in the history of man, that is going to continue over time, so long-term they should be in good shape. >> do you think bing has a shot against them? >> none. >> did you see apple? >> microsoft is throwing money down a rat hole. we're talking it's $10 billion they've lost on their online business now. $10 billion. >> you said they're running ads doing like a pepsi/coke taste test saying if you actually get rid of the logos on the top of the page that people actually bing better. do you buy that? >> i absolutely buy it. >> the results are better? >> it doesn't matter. people don't go because the results are better. they know with search google, that's what you do. >> earlier this week apple hires this guy from amazon, their search guru. what does that mean?
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>> he's the search guri and the siriguru and there's the whole idea people really want to talk to their phones instead of searching with text and that is going to disrupt google, if only we can fix siri, not going to happen. >> where are you on apple? are they the loser in this or the winner? >> i think they're in great shape. >> really? even with all of the articles you've been writing about maps and how they totally screwed it up and tim cook and this and that. >> that will go away fast. the biggest issue is a profit margin, they have a 30% operating margin in a hardware company. we're penetrating parts of the world where people don't have much money, the incremental sales for the iphone, the android is winning because they have many cheap phones out there. in terms of positioning they're in great shape. >> should they not want to be selling, your position is that apple should have a lower price point to catch those people or don't worry about the sales
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because they're not as profitable. >> there are 7 billion people ultimately 7 billion people will have them but they don't have any money. if you want to sell into that, that's where the cheap phones will work. ultimately apple may want to have a really low price point but it's not a question of their viability. they're in great shape. it's a question of the profit margin and if that comes down, stocks have a hard time sailing upstream. >> we constantly talk about blackberry because becky loves the keyboard and i love the keyboard and i have an affinity for it. i carry the blackberry and the iphone. >> isn't that embarrassing? >> i read that but i want to know is it possible when blackberry comes out becky will be happy and everyone will carry blackberries again in. >> no, it's possible you may be buying it. there may be a niche market for you. >> who don't care about appearances. it's not that, it's just not the most embarrassing thing let's
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say, me carrying a blackberry. so what? >> they will be bought by somebody eventually. >> who is going to buy them? >> the stock may be much lower when they get bought. hp has been saying we need a smartphone. >> are you writing them off, too? >> they have very challenging times. >> who else are you going to write off? make some more friends. >> microsoft. >> microsoft? >> microsoft is in trouble. the world is moving to mobile. last year profound change, more smartphones and tablets sold than pcs. the value of microsoft's platform which was so powerful in the 19930s, they got dragged into court by the justice department is eroding by the day. >> everybody says this new operating system is awesome. >> they're going to sell zillions of them. microsoft is minting money and plenty of profitability there. the world is moving away from them. they have the new phone third in line behind ios and android.
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>> governor, you have an ipad there? >> i do. >> what do you use as your phone? >> an iphone. >> there you go. >> i have a pc at my office when i can i use that. >> when i can. >> yes. >> yesterday i was giving someone an e-mail and he had an iphone and it was on the fourth try that he got my thing right. >> typing it in, that's why -- >> he wasn't holding it sideways. it's eelsier sideways but he was holding it this way and i watched his finger try to get on, number one you better be really calm when you're doing it. >> i drive a mini van, i -- >> it's this big. >> i switched over. >> wait a second do you write your column, do you write blogs and columns on it? >> no. >> because you can't. if you're doing anything useful you need -- >> that's why you need a keyboard. >> useful for your craft if
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you're blogging, posting. >> that's why the desktop and laptop is not going to go away. >> i talk to mine and it takes his e-mails. >> you really don't have a problem looking like a dork. do you do this on the street? >> news flash, andrew doesn't have a problem looking like a dork. >> i do this in the back of the car when jeeves is driving. >> thank you for having me. >> how old are you? >> 35. haley barbour will be staying with us for the rest of the show, he's going to be our tech guru, now that he's like mr. apple man. coming up we continue -- >> this show is off the rails. >> this is the show, get used to it. it should be off the rails. that's -- we continue our "what's working" series. is this series working? anyway with the heads of investments from north america at citi private bank, what else' his name, andrew?
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>> why would you do that to me? >> stephen bodurtha is bullish on european equities. and the the governors for pennsylvania and ohio will join us for conspiracy theorist a republican governor guest host and talk to two more of them, gosh it's great. 18 days from the presidential election and it's the 25 anniversary of the black market monday time crash. you're listening to "the time of my life" it hit the billboard top 100 list in 1987. ♪ you're the one thing ♪ i can't get you have enough of ♪ [ horn honks ]
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we are continuing our "what else' working" series. joining us is stephen budhurtha. citi private bank works with one-third of the world's billionaires overseeing $250 billion in assets under management, in the last week, stephen, have you looked at what some of these companies have
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said and re-evaluated what's working now? >> i tell you, the news most recent news is confirming what we've been thinking for a while, which is that some of the, what some people think are the green chutes in the housing sector and residential sector are really head fakes and so we have been seeing corporate profits probably continuing to turn down for some period of time now. we think that's going to continue, so we've been actually very cautious about equities. we've been underweight equities. we've been bullish on bonds the last up couple of years. >> how long equities? >> 18 to 24 months. >> that's not good. >> we're still constructive on bonds. >> you've stayed with bonds and haven't gone even though with the fed, with the pedal to the metal? >> that's right, and i think what we're seeing with qe3, there's a reason there's a qe3 following qe2, qe1 basically is that it's getting harolder and harder for the fed to stimulate
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economic activity so we think ultimately this is going to lead to disappointment. >> they can't stimulate the stock market. >> that's right, being underweight a little bit has peeled back on some of those returns but by and large, double-digit returns for bonds has been a good place to be. >> when i was listening to you, i needed you to clarify so the green chutes in the housing market may not have been indicating positive overall economic growth, but are you saying that the housing market, the green chutes aren't real? >> i wouldn't say that. >> the housing market's improved. >> encouraging sign in the housing market. >> it might not translate to corporate profits. >> corporate profits are challenged. >> you're right a lot of the companies have sort of at least validated to some extent that thesis i think, what we saw today, again, we keep seeing the word challenging. is it from europe? is it from china? is it domestically or all of the above? >> going back 24 months it was the western developed economy that was challenging. now i'd say the world is
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challenged and really where you'd have to look for growth is within certain sectors so overall gdp growth regardless of the industry is going to be challenged but looking within certain sectoring like energy, health care over the next eight to ten years these can be good places to find pockets of growth. >> if i were to come into a lot of money and i'm not expecting to, but if i were, what would you do for me today? it would still be fixed income? >> we'd be allocated about 45% global equities if you're a moderate risk tolerance. >> global? >> that's right. >> he's not moderate. he's conservative. >> i want to swing for the fences. >> he's not a moderate, he's a conservative. you're missing the whole -- >> i'm not, i'm neither -- i'm an american. go ahead. >> and we'd be spending a fair amount of time on the bond side as well, looking on the equities side in europe, we think valuation -- >> europe, not here? >> yes, valuation multiples are attractive. we look at cycleally adjusted pe
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multiples. when corporate profits are turning down we view pe multiples as overstated. they'll look larger than today and that cyclical adjustment. >> you can give me names in europe? >> can't do that but luxury brands are some of the productivity enhancers, mobile computing, cloud computing, et cetera. >> how about japan? >> challenge still. so valuation multiples are nice but with value strategies with the global market turbulence and the like, hard to unlock value. >> you wouldn't buy across the board big cap stocks here with dividends of greater than 3%? >> our u.s. allocation is underweight, not zero for sure, is focused on global franchises, dividend paying stocks and the like. within that sector we like them but generally speaking we're not nearly as bullish as others have been.
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>> what happened if obama raises the tax dividends on the 43%. does that affect the values of these stocks? >> it should. that's right. it's been interesting. the reaction leading up to this has been benign but there could be a different kind of cliff facing investors from the standpoint of personal tax rates and yeah we think people will be looking for other ways of generating income. you know what? the urge to own income-producing assets i think ultimately is going to overwhelm any concerns about higher tax rates on dividend paying stocks. >> stephen thank you for coming in. appreciate it very, very much. >> did you appreciate it? >> i figure i want to say it. i don't have to mean it. >> coming up -- >> i do mean it. do you remember where you were 25 years ago today? i think i was in fifth grade. we're going to take a look back at black monday crash of 1987. >> those are the best three years of your life, weren't they? >> fifth grade was good. and we are just, mr. haup was my
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teacher. we'll be back with all this and a lot more in a moment. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
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♪ i want to ride my bicycle welcome back to "squawk box." the biggest backer of dutch professional cycling has ended its 17-year sponsorship of the sport. it says it has lost faith in the ability of leaders to clean up the entire sport after the lance
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armstrong doping scandal. it's notable because the netherlands is a nation that has as many bikes as it does people and even that's not enough to convince them to stick around with the sport. when we come back we'll look at a particularly bad october trading day, 25 years ago today, this is the cover of the "wall street journal" on the day after black monday, this was back before they ever broke out of their format so the stock's plunged 508 amid panicky selling, took over the first two columns. that would never happen today. take a look at a1 from "the new york times" of the next day, this is more like it, all the way across the top banner, "stocks plunge 08 points, a drop of 22.6%," woo, bad day.
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♪ oh, i wanna dance with somebody, i wanna feel the heat with somebody ♪ ♪ yeah i wanna dance with somebody ♪ today is the 25th anniversary of black monday, that was the market crash of 1987. october 19th the dow tumbles 508 points to 1738, a one-day
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decline of over 22%. we were just listening to whitney houston's "i wanna dance with anybody" that hit the billboard top 100 list in 1987. >> i heard that song remixed with her interview with diane sawyer saying "crack is whack." if you get the joke. you're missing the joke but it's okay. >> okay. >> others might. >> that is a saying though in new york city on the east side highway, there's been a big, crack is whack. >> you don't remember -- >> i don't, but i would not but that has been a saying for a long time. you're trying to tush it into something dirty and inappropriate. >> the whole interview with this whitney houston song playing all morning and -- >> watching tv "business insider" is citing a news service that will remain nameless saying ge has cut its revenue growth forecast for 2013. >> what? >> to 3% from 5%. that is according to joe
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weisenthal. >> we'll take a look at the release. >> 22.32, 22.3. >> what time is it, 8:30? >> this happened two minutes ago. twitter is dangerous but i'm hanging on "business insider" at this point. i don't know if i've seen it on -- >> anything on the wires yet? >> on the wires yet, i don't know. >> well we'll keep an eye on it. as we were mentioning this is the 25th anniversary of that market crash day. we happen to have three market veterans who were working the phones in the trading floors on that day. rick santelli, kevin ferry and of course joe, who told us about his story a little earlier this morning, too. >> about? >> 1987, where you were that day. >> oh, 1987, i remember it so well but it was october 1st we had an earthquake, i was sitting in the same desk in l.a. rick, you were at drexel then? >> yeah, i was the bond futures
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manager, the desk manager for the cbo chicago board of trade. >> you know what happened to me that day? i'm remembering this now. i had a client who was getting his butt handed -- it was his own trade in s&p bond futures and he was down about eight points, that day i think by the end of the day he was up. what did the bonds move that day, rick? >> it was incredible, by the end of the day, there were so many wonderful stories but we were trading around i don't know, in the bonds around 75, 76 handle and i can remember people that always tried to buy some cheap options to make a few bucks, i had one client he has to go unnamed but they were really big in the day, and he was buying 78, 80 calls. we were laughing. i mean this was, but by the end of the session, not only was he getting the last laugh after several limited sessions, the 764s he paid for those was probably one of the biggest
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winning trades i put my fingerprints on and it cemented the notion that when everything's going to haties in a hand basket in equities, the bond market comes your haven, that cemented the '87 crash. >> the next week if you remember, kevin, we would go in, in the morning and the futures would be indicated down, the s&p would be indicated down 300 points. the worst thing that ever happened to one of my friends, he was a broker, he had a client wanted 100 puts and he put in a limit order, buy them at a quarter. 100 puts at a quarter, so he saw the market and it doesn't open right away. got to the point where the things that were at a quarter, he said, all right, i'm not going to get it. go in at the market and he got filled at 40, so he had 100 of them he was going to pay a quarter for, got filled at 40 and the end of the day it came back up so he had a million dollar, the client had a million dollar unsecured debit and he had to leave the business. but that was scary stuff back then, right? >> right, and that's just to put
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it in perspective, on the short end, rick was doing the long end. i was the t-bill arbitrager for dean witter's government. everyone started waving their hands as much as they could to buy as many as they could and you were talking about the markets, joe, the next day, all greenspan said was he would provide liquidity. he was raising the funds like 7.25, they only moved it to 6.75. we were quoting the market the next day on the short end 100 basis points wide, and people were still giving us orders to execute them. it's usually a half a basis point wide. >> 100 basis points, and for -- i remember every morning i'd go in and be scared, i was having gastric disturbance, it would be down 300 one day, up 300 the next and you never knew because
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the day it happened you didn't think, we were already down the previous week. do you remember how much we were down the previous week, rick? we had dropped from 2700, it came down a lot, and we didn't think you could drop much more but once we dropped 508 points, you thought that it might really just meltdown to where it goes down to like 400 or something from 1800. you didn't know at that point. >> what was amazing, joe, what was amazing is that implied volatility was mismatched for a very long time. the people i remember laughing were the ones long calls. i remember people sitting on the sides of the steps crying that were short vol. in the treasuries. people were carried out never to be seen again their financial balance sheets destroyed. >> right. >> volatility went up so high but it was completely wrong. if you would have sold those highs the day after the crash, that would have been maybe the second best winning trade, because it was mispriced for so long. >> the problem was, the only
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person that could do it was not in the business at the time. so that made it difficult. what i was going to point out, which was very interesting as people analyzed it later, as rick would attest to, us floor guys became more engaged in the process, the more the crisis rolled on, and the warning shot for the future is you can see market makers and price discovery, people become less engaged in the process as those volatilities blow out now, and i think that's the warning sign between the future and what happened 25 years ago. >> wow. kevin, rick, you guys, thank you. thank you for helping us think about an awful lot of things and we will talk to you guys both very soon. >> sure thing. >> also we should point out on that ge point, mary is on the conference call right now, we're checking with her to see what was said in terms of this, mary thompson is on the conference call. in the actual release going back and looking at it again, one of the points, no change in company outlook, on track to deliver
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double-digit earnings growth number in 2012. that's just the bullet point that they have. >> this is revenue growth. they're saying from 5% to 3%, two minutes ago supposedly was where they heard that. >> we're double checking with mary to verify. >> this is the new universe, that's "business insider" quoting bloomberg. >> the wire service. >> what are they saying? >> that ge cut its growth forecast, revenue growth forecast for 2013 to 3% from 5%. why the mayor is involved with this, something apparently to do with sugary soda. why, is there something else besides a mayor named bloomberg. i've never seen it. has anyone? >> no. >> i don't think so. why would you? showdown of the governors of pennsylvania and ohio will break down the electoral math in their states and their expectations for the november election. up. a short word that's a tall order.
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welcome back to "squawk box." the futures right now down about 36 points, now 41 points. we've had some news coming out of mcdonald's, had news from general electric in terms of the dow and after all was said and done as you can see indicated down about 0.29%. victory in the presidential election could come down to a few key swing states, with us now the governors of two of
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those swing states, ohio governor john kasich joins us from columbus, ohio, and pennsylvania governor tom corbett joins from us harrisburg, p.a., and we have a governor in studio as our guest host so it's like governors own parade. let me start with you my home state, governor kasich, and just to get the very latest polling or at least your feel for what happens in ohio, and i will tell you, governor, that hamilton county, where i'm from, used to be reliably red. i'm hearing anecdotal evidence it's gotten much more purple recently. cleveland is a write-off for a lot of republicans in northeastern ohio but it used to be cincinnati was reliably republican. is that different now? >> i didn't know you were a political analyst. i'm not sure i agree with your analysis here. >> anecdotally what people talk about. i didn't analyze anything.
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don't get combative. i'm trying to help you. what's that? >> the situation is after that first debate things have changed in ohio and the reason they changed is real simple. people knew romney was smart. they knew he knew how to create jobs. they didn't know if he figured out what their problems are, or if he understood them, and he punctured that in the first debate and i believe he was able to connect with people to say look i not only know how to do this but i get you, and i think that was critical, and i think romney right now, if i had to bet money on it, is surging ahead. i don't think it's by a lot, but i think he is ahead. the race is fluid, and ohio remains a swing state because we're basically a microcosm of the whole country. right now the enthusiasm is behind romney. it's not over yet. >> you think he's ahead in ohio in. >> i think he is right now. but it's not by a lot. i think he is ahead, and, but we still have a ways to go. we have a debate on monday, a
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lot of things happened, but right now i think romney has moved ahead and i've been saying it all along i thought obama was ahead so i've seen a perceptible change. >> joe, let me if i may, one reason i wanted to have these two guys on here is that unlike wall street, main street has been very flat. you don't see any increase in the economy, median family income is down $2,500 in the obama recovery. these two guys have states where the economy is growing and tom corbett i would like to ask you a big region for is you energy and what's happened in pennsylvania. you want to tell us a little bit about that and the role of the federal government versus the state? >> we're doing very well with the development of the marcellus share and the utica natural gas here in pennsylvania. it's resulted in almost 30,000 jobs just in the core industry. in our last five, six years we've drilled close to 6,000
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wells, 2,800 are already currently producing, so it is growing jobs and going to grow future jobs. shell has decided to site, we believe they will site an ethylene cracker facility in western pennsylvania that will provide jobs in the short term and also in the long-term because the petrochemical industry we think is going to grow around it. and it's going to grow over into west virginia and over to my colleague, john kasich, in ohio. >> the president, tom, talks about how under his administration all this increase of drilling, the fact, has the federal government been your partner in this or have you had to overcome them in. >> we've had to do our own environmental enforcement. we've had difficulty with the epa in a number of different areas when it comes to business. obviously when it comes to coal, they've been very difficult with us. with the natural gas, we're much more on top of it than they are. they want to double check, triple check from seven different agencies what we're doing.
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they're not exactly helping the natural gas development as compared to what the president is saying, his agencies are doing the opposite. >> john, if i may, john, in your state you've got a little bit of this shale play, but your economy which had really lost i don't know hundreds of thousands of jobs, you had an $8 billion deficit, you all have got that turned around and i'd like for to you have a little bit of time to say why and how. >> when i started, we had lost 400,000 jobs in the last four years, haley, and we were 8 billion in the hole and had 89 cents in our rainy day fund. now we earned balance, we have over a half a billion in our rainy day fund and we're up about 112,000 jobs since the administration's come in, worked with the legislature, and the way we did it is basically we got rid of programs that made no sense anymore because government spends money that's not its own so they're not always very much on top of things, but we also fix things without regard to the
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political considerations to make things work better at a lower price. that's the 21st century, better products at lower prices. we cut taxes and then our regulators, they understand job creators. it doesn't mean we give away the store but it means we work with them and we're not duplicative and beat them over the head so the fact is that the policies we're running are really not much different than what ronald reagan did when he came in which is government that is effective where it needs to be, lower taxes, we killed the death tax, lowered the income tax, have regulations that make sense, that are consistent with job creators, but without giving away the store, and you know, we're doing fine, but we have to keep going. we have a long way to go, but it's working, and what my problem is, i get all theese headwinds from washington because businesses are paralyzed. they don't know what's going to happen with health care, they don't know what's going to happen with taxes. we have this fiscal cliff and all this stuff is a mess. i just wish i could get somebody
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down there to put the wind at my back so we could really help ohioans. >> whether it's true or not the obama administration is trying to take credit for a lot of what's happening in ohio because as a beneficiary of the auto bailout, and that's one of the reasons they're saying it's got a lower unemployment rate. is that not true or do you try to counter that perception? >> first of all, i don't worry about countering anything. ohio has been outperforming all of the other states. secondly when you take a look at the bureau of labor statistics, that organization that went from obscurity to becoming very much famous. >> infamous. >> it says that the number of auto jobs are down 500, so of the 112,000 that have been created we're down 500 auto jobs. that doesn't mean that the auto companies aren't investing in ohio, because they are. chrysler is slightly up. ford and gm if you check out their strategy they're kind of shrinking their footprint. we're thrilled we have auto jobs in ohio, we're happy about it but it doesn't account for the
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find of growth we've had. >> were you in favor of the bailout? >> i wasn't a congressman then. i was just a citizen. i'm glad that these companies are strong. >> it is interesting, joe, that they take, the administration takes the position well we did this and ohio's economy is growing because of this yet the number of auto jobs in ohio are down and the jobs are outside of auto. >> what's happened in ohio, guys, we've diversified our economy. we're not just a one trick pony anymore. we're not just manufacturing. our greatest growth in the last quarter was i.t. we have strong health care, we have energy, agriculture, specialty manufacturing, logistics, we're diversifying ohio and it's looking different than people thought about it just a short time ago. >> governor corbett, what about pennsylvania? what are the chances that governor romney can win pennsylvania? and where -- >> i -- >> go ahead. >> i think his chances are
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improving day by day. as john said after the debate we saw a tremendous change. the wind is to the governor's back at the moment. the polls are narrowing. internal polls, he's outperforming a lot of people in a lot of areas that we didn't think we'd see him performing very well. didn't think we would see him performing very well. the house and senate does polling on a regular basis. he is doing well in those areas where he has to do very well. i think it's going to be very, very close in pennsylvania. >> western pennsylvania will do much better because of coal and the opposition of the administration to coal and their energy policy generally, is that a fair assessment, tom? >> that's a very fair assessment. he will do very well, much better than the past candidate, mr. mccain did. but he's also going to do well here in western pennsylvania and the southeastern counties. he is doing much better there
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than senator mccain did in the race four years ago. and it's really going to be a turnout model. we believe the boots on the ground will make a big difference in this campaign. and the state republican and national party have been energizing the people and they are energized. i all the time. we just had ann romney earlier this week. 900 people packed the hall. we would not have done that four years ago. and you don't see the opposition to the candidate this time that we saw four years ago. people are ready for change, all looking at the economy. >> one point i would like to make is whoever wins this election, those folks in washington better get their act together. if they do not begin to get
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their act together, those congressmen, you know -- this is -- they've got to get moving on this. >> all right, governors, thank you. i was going to ask you about brown, but we don't have time, thanks, maybe we'll see you again, governor barber with us for the rest of the show. >> we were talking about ge earlier. i just spoke with ge. that revenue number with the headlines getting thrown around on twitter and other places coming down from 3% to 5% is because of ge capital. that will affect that total number. the overall industrial revenue growth number is still 10%. everyone knows that g.e. capital will continue to shrink. >> so people are misstating -- >> it is the whole company, but -- >> was the old number 5%. >> 5%. >> that they were forecasting and now it's 3%, or are they
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saying we were going to shrink it all along. >> it sounds like when you look at where they're going to be, they've been given different parameters. the industrial growth is still 10%. >> just a clarification on things out there on twitter, on the wire services, and other places. >> when we come back, we have more from our guest most.
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welcome back to squawk, making headlines crossing the tape, at&t seeks to move assets to a trust. they filed an application to the department of labor, it wants to defer equity business in it's wireless business. earnings per share are not expected to be different than if this contribution had not occurred. questions always happen when you contribute -- >> that's like instead of saying we want to do the wire line -- >> still growing. >> coming up, we'll give halely
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basher the last word. [ male announcer ] how do you turn 30-million artifacts...
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let's get back to halely basher for the last word. and your last word, challenging. >> you said over and over, business leaders talking about
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the challenges of this economy. that's not news for main street. the recovery has not really come to main street. it's very, very flat. it's good to hear wall street for once in tune and in line with main street. that's what i hope this election will be about. >> governor, thank you very much for joining us today, it's been a pleasure. >> thank you very much for joining us. "squawk on the street" begins now. i've been in the business 20 years and never seen anything close to this. there are so many different things that are weighing on this market right now, but we could have a 100 point rally tomorrow, we could also be down, you just don't know. >> an unforgettable day for those who lived it. 1987 black monday.

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Squawk Box
CNBC October 19, 2012 6:00am-9:00am EDT

News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

TOPIC FREQUENCY Us 31, Google 25, Motorola 19, Romney 14, Europe 12, Pennsylvania 11, Haley Barbour 9, U.s. 8, China 8, Joe 7, Citi 6, Ohio 6, Dell 5, Becky 5, America 5, Honeywell 4, Duff & Phelps Financial 4, Sec 4, Henry Blodget 3, John Kasich 3
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